Dubai-based Islamic mortgage lender’s shares resumed trading on the Dubai Financial Market this morning and, as expected, the shares slumped 10 per cent, the maximum allowed in a trading session, minutes into the trading.
Share prices fell from Dh0.99 (the level at which they were suspended in 2008) to Dh0.891 within half an hour of trading on the DFM.
Shares of Tamweel and Amlak, another Dubai-based Islamic mortgage firm, were suspended in November 2008 after an announcement that the two companies were planning to merge. However, the subsequent real estate crash and a liquidity crisis saw the firms abandoning merger plans.
Tamweel, which had also stopped issuing loans, Tamweel resumed new mortgage lending earlier this year after Dubai Islamic Bank (DIB) took a majority stake of 57.33 per cent in the company in September 2010. The move effectively rendered Tamweel a subsidiary of DIB.
The country’s real estate market has undergone a sea change since Tamweel’s shares were suspended in late 2008, with property prices plummeting by an average 50 per cent and a surge in delinquencies.
While some of Tamweel’s investors, which had been stuck with the share since trading was suspended, quickly offloaded their shares, share prices reaching the circuit-breaker meant that many more will have to wait until tomorrow to take the exit route.
Analysts expect shares to fall again, perhaps limit down, for the next few sessions before bargain-buying puts a base on the price.
Tamweel reported higher quarterly profits last week, from Dh5m in Q1 2010 toDh27m in the latest quarter. The mortgage lender booked impairment provisions of Dh16m dirhams in the quarter compared with Dh50.75m in the year-before period, it said in a statement. The company had annual net profits of Dh26m dirhams in 2010, from a loss of Dh54.4m in 2009.
Follow Emirates 24|7 on Google News.
